Very bad jobs reports as workers are not returning to work as expected.

 

Construction workers wait in line to get their temperature taken. Reuters. 

American job growth slowed in April with only 266,000 new jobs being created. Reuters. Economists believed that almost a million jobs were expected in April. The numbers for March were also reevaluated and only 770,000 jobs were created as opposed to 916,000. The unemployment rate rose to 6.1%. The problem appears to be due to a labor shortage as demand for products increased in the same time. Some are blaming workers being afraid of the Coronavirus despite vaccinations or difficulty in finding childcare. However, many economists are blaming the major unemployment benefits increase that was passed under the Covid relief bills. The unemployment benefit which includes normal payments plus a $300 a week bonus pays more than many lower wage jobs, leaving little incentive for lower wage workers to work.  

My Comment:

It seems strange that we have a labor shortage at the same time unemployment is so high. But that certainly seems to be the case right now. We have a situation where nobody can find jobs and nobody can find workers. Part of the problem is that the workers needed are not the same as the workers that are out of work. An unemployed restaurant worker might not want have the skills to work at a manufacturing job and so forth. 

I can confirm that the labor shortage is real here in Northeast Wisconsin. I trend to listen to the radio when I drive so I hear a lot of radio commercials and it seems like every single one is a manufacturing plant looking for workers. My own place of employment is fairly desperate for workers and had to actually briefly slow production down as there wasn't enough line workers to work at full speed. 

I think that the obvious problem is the fact that benefits are so high right now. Everyone is flush with cash right now from tax returns and the last stimulus payment and if you are also on unemployment you are getting even more money. Why would you want to take a paycut to work hard at a smelly, dirty factory when you could just sit at home instead? I can't blame people for not wanting to work!

I think this is probably the strongest argument against Andrew Yang's Universal Basic Income plan. When people have enough money to get buy they simply are not going to work. There is no incentive to do so unless you can get a lot more money than you get from the government. And right now the government is making a much better offer. 

I don't think that's the only factor though. I think the child care issues from home schooling many of our kids is kinda screwing things up. In a two parent household someone's got to stay home and watch the kids even if the kids are doing at home learning. Without the free child care schools provide it's very easy for the cost of childcare to make it not worth it for one parent to work. And I think some of these people will realize that staying home taking care of the kids is not so bad after all. 

I also think the eviction ban might have played a role as well. I am guessing there is a huge number of people that simply aren't paying their rent right now and that means too that they would be less inclined to work. A judge just threw that out so we might see a large number of evictions and that could lead to better jobs numbers in May when people realize that they actually need money to have a place to live again. 

I don't really think fear of the virus factors into it. Fear of the Coronavirus seems to be exclusively an upper class thing that's mostly about virtue signaling. Among the working and lower classes it's an after thought at best or a scam at worst. With vaccinations now common I think the virus is mostly an afterthought for most working class people. 

Biden's policies are to blame for some job loss as well. His crusade against energy production cost quite a few jobs and those are the kind of people that aren't going to take a lower paying job. These are skilled labor jobs that aren't easily replaced and I haven't heard any answer of what these people are supposed to do. 

I really don't see the economy being in a good place right now. It's been propped up because the government has been throwing money at people. That's not sustainable and is already causing price increases and inflation. Eventually the band aid is going to have to be ripped off and the people on benefits are going to have to go back to work. But given which party is in charge I expect a lot of damage to be done before that point. And it's very possible that we could be heading to a period of stagflation...